Court Quickly Dismisses FDCPA Suit

An Illinois federal court dismissed a Fair Debt Collection Practices Act case this week that involved a collection account number being visible on an envelope containing a debt collection letter.

The court held in Sampson v. MRS BPO LLC that simply placing an undecipherable sequence of numbers and symbols on the outside of an envelope when communicating with a consumer cannot constitute abusive debt collection practice outlined by the FDCPA. In short, the mere presence of such internal tracking numbers, markings or codes on such an envelope cannot serve as a legitimate basis for an FDCPA action, according to the court.

The dismissal occurred one day after the complaint was filed and before the collection agency asserted a defense. The consumer filed an FDCPA lawsuit in in the Northern District of Illinois on Monday accusing MRS BPO of using "unfair and unconscionable" debt collection practices and engaging in harassing, oppressive and abusive conduct while collecting a debt. The consumer alleged that the collection agency violated the law when it sent her a collection letter earlier this month in an envelope where her collection account number for the alleged debt was visible.

The court quickly determined that the "Complaint is a bad joke - a joke because the claims are so patently absurd, and a bad one because $400 has been wasted on a filing fee."

The court held that any member of the public who might see the envelope would not determined that the envelope was related to collecting a debt. The court further noted that the collection agency did not commit any "statutory sins" when it placed the collection account number on the outside of the envelope.

Instead, the court ordered the consumers attorney to appear in court on March 30 to explain why his conduct is not sanctionable under Rule 11 of the Federal Rules of Civil Procedure.

The courts decision falls out of line with a ruling last year in Douglass v. Convergent Outsourcing, in which the court found that an account number showing through the window of a collection envelope violates the FDCPA.

Convergent Outsourcing argued that a three-judge panel erred in its ruling and that "every shred of evidence presented to the district court revealed that the number was innocuous." But the appellate court in September rejected the argument, ruling that it was information that possibly could identify the debtor.

Convergent Outsourcing, formerly ER Solutions, sent the letter in 2011 to pursue a debt allegedly owed to T-Mobile and, with her name and address, it had listed her account number with Convergent. The FDCPA prohibits anything other than the collection agency's address appearing on an envelope that carries a collection letter. In this case, the account number was not on the envelope, but the location on the actual letter made it visible.

The case is believed to be the first involving FDCPA violations stemming from the use of modern technology generating an internal tracking number. The collection industry feared the Third Circuits decision in that case could result in a binding precedent and, in fact, the opinion still controls in the Third Circuit (Pennsylvania, New Jersey and Delaware).

ACA International, the largest association representing collectors, is advising its members to continue assuming that any language that might identify a recipient of a letter as a consumer debtor (including account numbers) - and is in any way visible to a person handling the mail - violates the FDCPA and should be avoided.